Government to review laws to curb profiteering

Minister of Trade and Industry Sosten Gwengwe says government is considering a review of some laws to curb profiteering tendencies that subject consumers to unfair trade practices.

Speaking yesterday in Kasungu on the sidelines of the World Consumer Rights Day, the minister said the review of the law will ensure that government starts regulating distributors and suppliers who are currently in self-regulation.

Gwengwe said this on the back of ongoing sugar supply glitches due to underproduction by Illovo Sugar (Malawi) plc, the major sugar manufacturer controlling about 90 percent of the market.

He said: “They [suppliers and distributors] need to justify why they are raising the price of sugar when their supplier, Illovo, has not raised the price.

“All this is what we call unfair trade practice and it is the duty of the Ministry of Trade and the Competition and Fair Trading Commission [CFTC] to put laws that safeguard against such malpractices.”

Gwengwe said going forward, the ministry will start licensing distributors because they were under self-regulation and that has not helped in as far as sugar pricing is concerned.

But the minister admitted that the Malawi Stock Exchange-listed sugar manufacturer did not produce enough sugar to satisfy the local market.

As a result of this, the price of sugar on the market has gone up to about K3 000 per kilogramme, a development CFTC has attributed to hoarding and overpricing by some distributors and wholesalers.

Gwengwe, however, assured that Illovo Sugar and Salima Sugar Company will resume production of sugar in April, a development that will address the scarcity of the commodity.

CFTC board chairperson Jerry Jana said in an interview yesterday that they have closed a number of shops that were found hoarding to create artificial scarcity, causing prices to go up.

In a joint exercise last week, the Ministry of Trade and Industry and CFTC sealed four shops in Lilongwe for overpricing and hoarding sugar.

“The joint exercise confirmed that some wholesalers are selling a 20-packet bale of Illovo Sugar at K69 000 which is much higher than the manufacturer’s recommended price of K37 500,” reads the statement signed by the ministry’s Principal Secretary Christina Zakeyo.

She said traders selling sugar above the recommended wholesale price and retail price of K2 250 per one kilogramme packet are breaking the law.

Said Zakeyu: “Anyone charging unfair and excessive prices way above these recommended prices are breaching the Competition and Fair Trading Act and the Business Licensing Act 2012.”

Consumers Association of Malawi executive director John Kapito accused the ministry of being slow to react.

“The ministry and CFTC shouldn’t be reactive, but proactive. They can’t keep closing shops. What we want is for sugar to return to the market,” he said.

In 2023, Illovo Sugar (Malawi) plc produced 264 000 metric tonnes (MT) of sugar, a 15 percent increase from close to 230 00MT.

Out of this, 225 400MT was for the domestic market and 29 400 for the export market, according to its 2023 annual report.